Spiralling rental market forces 'hundreds of thousands' into social housing

Will stocks rise and are they a buy? Experts say property prices don’t have to crash!

 

Most (80%) of Singaporean's live in government built HDB housing. It would be nice if there was an efficient government owned construction company that focused on providing housing to meet accommodation needs for the population. If Singapore is your model, then this is the housing solution.

Tax rates so not always indicative of the extent of government involvement in an economy.

 

WA housing crisis forces Exmouth workers to sleep in their cars

• Workers who keep regional towns like Exmouth ticking are forced to sleep in their cars
  
• Exmouth services the Ningaloo Coast, which had half a million visitors through the nearby Cape Range National Park last year
  
• Towns like Karratha have seen an over 20% jump in the house sale and rental prices in the past 18 months
  

 

Singapore is also a dictatorship that exploits foreign workers for unskilled labour...

 

Its not the commonwealth government role to construct peoples homes and address social housing support. Its a state power in the constitution as it relates to state land. This is why many schemes are funded from the commonwealth to the states.

Its also not necessarily the role of states to construct housing. They tend to acquire completed works put to tender for public housing etc. Governments are terribly cost inefficient at building things. At the end ofthe day the responsibility for basics of life often fall on those people to ensure their own needs are met. Handouts cost a lot of money and its debatable if some should be funded by taxpayers. Even NSW landcom is a profit making agency. Its job isnt to flood the market with cheap housing. It is to sell land that is released to ensure new communities are built, well.

If we gave approval to a major governmnet project to flood the market with homes it would become a large agency that is riddicled for overpaying. A insulation batt scheme on steroids. The Rudd schools project was a great example. $500K designs ended up costing $2m when the small tender group all bid welll above market and made huge profits.

The present LibNats housing schemes encourage states to construct affordable housing but the volume being constructed isnt really keeping pace with demand and rising rents. These properties are managed by charities and community and welfare agencies to manage the use efficiently. It has become criticised because loads of people see it as a free or cheap ride and the demand well exceeds supply and cases are merit based. Many who miss out are vocal but their needs may also mean they actually rank poorly for availability v others.

If you build a free soup kitchen it will contain a large % who actually have no need who want to take a free ride. And others who are genuinely in need.

 

You my man, must have been seriously mistaken, to think,
this whole drama about affordability, has any thing to do with finding real solution to housing supply crisis.

We in STRAYA truly believe...
when a can.. can be kicked why bother picking it up and recycling it, what's the fun in that?

 

The sad reality of Australia which has been happening since the early 2000’s is that it’s becoming a far less egalitarian society. Life and social standing is more and more dictated by the assets your family has.

If you were entering the workforce now, even on a very high wage, unless you own a business you’re simply not going to be able to catch up. Let alone if you’re in a marginalised group, you’re honestly screwed.

People with assets don’t really want to fix the issues, because frankly, human nature dictates that people are selfish. No one wants to admit it, but at the end of the day people will look out for numero uno above all else.

We will all talk about how sad it is, but like most things in life and this political environment it’s all just words. People will not vote for things against their interest, no matter how “sad” the situation is for others.

It’s only when the situation reaches a tipping point and significant social unrest occurs and things are forced to change.

History doesn’t repeat itself, but it often rhymes.

 

Exactly what we do with Pacific island workers, foreign students and backpackers. We can't do that in building and construction because of unions.

 

An example of a current rental ad for a "room":

News article: Fitzroy bathroom with bunk bed, $910 monthly rent labelled ‘absolutely cooked’ - realestate.com.au

The actual ad with photos: https://www.realestate.com.au/property-other-vic-fitzroy-433880923

Literally a bed added to an existing bathroom.



Looks like a prison cell?

 

Pretty famous rooming house. I think the landlord is in jail? Not for being a slumlord, but for a gold heist?

 

Love this post.

But I 100% disagree about Australia becoming less egalitarian.

Technology, openness and a strong economy has created more opportunities for almost ANYONE to get ahead if they wanted to. I think Australia is an increasingly wonderful place to live, full of opportunity to thrive, create businesses, impact meaningfully and contribute to society in so many ways.

We just get TOLD that life is harder every time we look at a screen. Its constant. Its hard to get away from these voices and we consume these voices far more now with technology in our faces.

Personally, I genuinely believe it would have been harder for myself in every two decade period prior to the 2000-2020's. The 1980's-2000s would be trickier economic difficulties that existed. The 1960's-1980's children of my colour would've faced less opportunities (there would have only been a very small subsection then given white Australia policy).

I'm not some rich kid claiming its easy either.

My personal circumstances would probably be trickier than most. We didn't have a home at times. We relied on brilliant charities to get us through at times, literally to feed us & house us.

But I did get every chance that a country can provide to change my circumstances. Australia provides this. They made access to uni free and easy to achieve. And they presented wonderful economic opportunities and created fair, reasonable access to achieving it.

Yes my peers may have had a slight bit of a leg up via private schools/etc, but the circumstances in this country provided a platform and opportunities to not only catch up, but run miles past them if I wanted to.

In my early 30's, I run businesses employing lots of people directly, and hundreds indirectly.

And the best part?

Starting again, I'd get here faster and better now, because the opportunities are even better today. That is, children of any race/ethnicity/gender in my circumstances have the opportunity to do the above and much much more today than almost any other time in our history.

That is, what society should present everyone with. A fairly equal opportunity to succeed. Thats on offer. Whether individuals walk through the doors that this country opens is up to them. My mentality drives my own personal motivation to break all the doors down and take the gift of being an Australian with both hands.

 

That's speculative to think that negative gearing keeps a 'lid on rents', I may as well ask a landlord to reduce rent by $100 because it will help with his tax deduction.. We did temporarily remove negative gearing ages ago and there was no substantive link showing an increase in rents with the removal of negative gearing. Keep in mind also that not all investors purchase investment properties with the aim of negatively gearing as well. It's generally more beneficial for high-income earners as well which do not make up a majority of the broader Australian economy.

 

Again, negative gearing is not a "benefit" - it doesn't benefit high income earners. It is just a more holistic way of calculating taxable income.

All negative gearing does is allow all income and all losses to be added together. Otherwise, adding all income and only some of your trading losses as tax deductions would be an unfair way of over taxing people.

My point in my earlier post was simply that negative gearing removes disincentives (as opposed to "creates incentives") for private investment in real estate.

 

I'm aware of how negative gearing works. "However the flipside is that it is also the reason why rents are low". My point was about there being little proof of a connection between the removal of negative gearing and high rents. It removes a disincentive but it doesn't remove the key incentive of capital growth which is the main reason why investors invest in property.

 

Yes, it's one of the reason yields are so low in Australia.

 

Yeah. I have worked for two State Housing Agencies (oh and one Federal).
The waiting lists are tens of thousands big in each State (and thats for people in serious situations). To get public housing you need to be in an Extreme situation.So I dont know where these people are being "driven to" because there is nothing there.

But I think there is a growing accommodation issue in Australia it seems. And I do have concerns about the social justice aspects of that. If people dont have affordable housing it costs the country more in the long run in social services/crime etc. Lots of data shows that public housing is cost saving (i.e. good investment) for the govt.

 

Agree, and hence almost no barriers to entry. Perfect for someone that needs immediate cash.

If you force it to be suitable as a career or a way to support a family and mortgage you'll trade off the ease and availability a simple income.

 

As a practice who sees a lot of property investors I would certainly disagree with that view. Neg gearing is highly desired. I wouldnt speak to a buyer who isnt chasing some sort of tax benefit. Especially by high income earners who may more easily afford further loans. Their marginal tax rate (47%) produces a multiplier benefit v low income people (0-19%) Debt recycling is also a strategy that is becoming well entrenched and costing more and more tax revenue. It exchanges non-deductible debt for tax deductible debt. I have seen data suggesting 300-400% in the past 3 years.

This is why in many countries like NZ, UK and Canada they have adopted tax changes which now cancel interest deductions (implemented over time). This now acts to convert what was neg geared into taxable income which IS a disincentive despite the lost interest reducing CGT outcomes. Many are selling down holdings to avoid the impact of being taxed. This makes ownership more costly and acts as a disincentive to chase growth.

And remember neg gearing in the Australian context can include shares, ETFs and property.

Its hard to see changes in rent through removal or changes to neg gearing etc. If people sell property someone else buys it. The property market may shift through owner occupiers finding property more or less affordable. Rent increases could also see yield act to encourage more investors. But rate rises will erode this. Cash buyers may chase investmnet yields where borrowers may be discouraged through higher rates and taxes.

I have modelled a basic scenario of what the UK, NZ and Canadian changes would look like here and its not pretty. Imagine finding your $3568 a year enhanced tax refund is now $4341 of extra tax. Thats $7909 of negative cashflow. Per year. On a $450K property thats a equivalent to almost 2% of growth. Its also 33% of gross rent !!! It kills yield.

 

Just curious, how are negative gearing linked to low rental yields?
If I have to revise rents, I usually consult my PM and look around what's on offer and getting rented, then I reduce the rent a tiny notch to avoid sitting unrented, it gets more interest and not necessarily worst rent.

Point is... Holding cost of the year being positive or negative has nothing to do with what rents I get, what am I missing?